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Our approach to ESG
Our commitment to our clients is to consider the bigger picture when it comes environmental, social and governance (ESG) investing. We resist a formulaic or tick-box approach, and ensure that ESG considerations are fully integrated into our investment process and applied in line with our 3M philosophy.
We believe businesses must be sustainable to thrive and deliver shareholder value in the long term. Therefore, we do not believe ESG investing should be a simplistic, add-on or stand-alone process. Moreover, ESG is not just about the now, but also about the future. Part of our process is to engage with companies to ensure they improve their overall ESG record. As a result, not only do we invest in companies with good ESG track records, but we will also consider investment in companies that show a clear commitment to future improvement. After all, sometimes the biggest win for society is in helping perceived laggards make the transition to delivering on more sustainable outcomes. Importantly, we view ESG considerations holistically. ESG should not just about the E (environment). Social and governance factors require due consideration.
While our choices can sometimes appear counterintuitive at first glance, we believe our bigger picture perspective and longer-term approach can help to achieve more considered ESG outcomes, while also rewarding our investors in the long run.
More insights into our ESG Approach
Our annual Stewardship Report highlights our thinking on
ESG-related matters, and details new developments during the latest reporting period.
Our voting record
We aim to exercise our proxy voting responsibilities in an accountable and transparent manner. We report on our proxy voting decisions annually.
Other documents
Statement on the Code for Responsible Investing in South Africa (CRISA)
Case studies
Thinking about the role of defence in an uncertain world: Babcock International plc
Our shareholding in Babcock spans over several years. This case study illustrates that issues around ESG considerations are not static and change over time, requiring a dynamic approach and the ability to keep an open mind.
Engaging over multiple years for greater impact: Nampak
Nampak Limited (Nampak) is a diversified packaging manufacturer with operations in South Africa and other parts of Africa. It has a strong focus on metal packaging, which is attractive from a sustainability perspective, as especially aluminium packaging is being recognised for its recyclability.
Engaging on the thorny issue of executive pay
Few topics have drawn as much ire and scrutiny as the one of executive pay. What constitutes ‘fair’ remuneration for the executives and directors who are tasked with setting the strategic direction of firms, and who can make a material difference to the outcomes companies (and their shareholders) achieve? In South Africa, with its highly unequal distribution of income and wealth, it can become an especially contentious and emotive issue.
How we approach ESG in the fixed income space, and how it sways our decision-making
The analysis of ESG factors is seamlessly integrated into our investment process within PSG Asset Management. In a fixed income-specific context, ESG factors help us to assess a full range of risks relevant to an investment case, whether upside risk (positive ESG factors) or downside risk (negative ESG factors). Material ESG risks to an investment case could serve as a signal to avoid an investment opportunity.
Thungela Resources: Considering the holistic ESG response
Sustainability is a complex issue, and although the tendency is to reduce it to environmental factors alone, it deserves a considered and holistic approach. In this case study, we focus on Thungela, a thermal coal producer with operations in South Africa and Australia.
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